First Home Buyers Guide To The Home Buying Process

Being a first home buyer can be a challenging and exciting time! Buying you first home is one of the biggest financial decisions you’ll ever make, so we’ve broken it down into 10 steps to help you through the home buying process. These are;

1. Organising Your Finances

2. Find A Property

3. Engage A Conveyancer

4. Research The Property Market

5. Make an Offer/ Reserve a Property

6. Contract of Sale

7. The Deposit

8. Cooling Off

9. Finalising the Loan

10. Settlement


1. Organising Your Finances

So, you’ve made the decision to buy a house, now you need to take a good look at your finances and work out what you can afford. A general deposit for a home loan is 20%, and anything below that requires you to get Lenders Mortgage Insurance. You can deposit as little as 5%, but you will be required to pay for Lenders Mortgage Insurance.

Keep in mind, there are also additional costs such as home and contents insurance and stamp duty. We will cover this a later step.

2. Find A Property

When looking for a property, think about what you are wanting to buy. For example, if you’re buying with a partner, are you planning to grow your family, are you planning to renovate? Also create a list of must-haves and nice-to-haves, to help you narrow down on exactly what type of property you’re looking for.

3. Engage A Conveyancer

Conveyancing is the process of transferring ownership of a legal title of land to the new owner. Having a conveyancer help you with the complex legal paperwork can be very beneficial as a first home buyer. Hiring a conveyancer can help you avoid small mistakes that could have big consequences, such as losing your property and your deposit! It’s not a legal requirement to hire a conveyancer when purchasing property, but it is highly recommended.

4. Research The Property Market

When looking at property, we’ve created a small checklist for things to research:

  • Research the suburb and surrounding areas
  • Research rental income per week
  • Research similar property sales
  • Determine the value of the property
  • Research the history of the property
  • Research the flood history of the property

Having this information can help you make an informed decision about the offer you place for a property, and give you insights about future costs such as renovations if it’s an older home.

5. Make an Offer/ Reserve a Property

When you’re ready to buy, the next step is the make an offer. There are two options for this;

The first, an unconditional contract. This is a binding contract to purchase the property outright, if you have confirmed finance and are certain about the property.

The second, a conditional contract. This is a binding contract to buy, if particular conditions are met. For example, finance approval and inspections.

6. Contract of Sale

The seller of a property will organise a contract of sale. When you visit the property, inspect it and talk to the agent or seller. Once you are happy with the property, you can ask for a copy of the contract of sale. Prior to signing, it’s always beneficial to seek advice from a solicitor or conveyancer to review the contract. This can help you avoid costly mistakes.

7. The Deposit

If you are at an auction, you are competing with other buyers. On auction day, you will need to register as a bidder and express interest by making bids. If you make the winning bid, you immediately enter into a binding contract and there is no cooling off period. You are required to pay a deposit, which is usually 10% of the sale price and sign a contract on the spot.

In a private sale, you will negotiate the sale price with the seller through the real estate agent. You can make an offer to the real estate agent to express you interest. This process can be quite lengthy and  take up to a few weeks. Once both you and the seller agree on a sale price, you are required to sign the contract of sale and pay a holding deposit. As part of your contract, there might be a cooling off period. Make sure you know these details prior to signing the contract.

8. Cooling Off

The cooling off period is an amount of time post signing the contract of sale where you can back out of the sale. This period starts on the day you sign the contract and typically lasts two business days but varies with each state. As you are cancelling a contract, this comes with a fine, which is a percentage of your deposit. If you haven’t already, the cooling off period is a good time to do further building or pest inspections before the contract is finalised.

9. Finalise the Loan

In this step, you need to tell your lender that you have found a property you wish to purchase and apply to finalise your loan. You need to provide your bank with the final documents of your contract, so they can value the property and assess your finances, before finalising the loan.  

10. Settlement

This is the final stage before you can move in. The settlement date is the date that the property is transferred into your name and your mortgage begins. The contract of sale outlines the settlement period and when you need to pay the full price for your property. Your solicitor or conveyancer will finalise the settlement with the seller, and once that is complete, you get the keys to your new home.

You may also need to purchase home and contents insurance as a condition of your home loan. This will protect your home and contents against any damage or loss.

As part of purchasing a new home, you are required to pay stamp duty. This is a one-off state government property-transfer tax, that is usually required to be paid within 30 days of settlement.

Most State and Territory Governments provide a stamp duty concession for first home buyers. Each state has different conditions for stamp duty concession, so it’s best to check what the conditions are in your state.

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